“Many farmers will not listen when discussing marketing their production.”

Yet, selling commodities is the essential part of profitable production, according to Tom Leffler.

“When marketing is mentioned to farmers, they are ‘too busy’ to talk, or just say no thanks,” Leffler pointed out.

Speaking at a Farm Profit Seminar in Alma, the risk management advisor from Leffler Commodities at Augusta discussed marketing tools.

He said 82 percent of farmers store a portion of their crop for later sale. About 69 percent of the producers forward contract grain while 67 percent set up a cash spot sale.

Others have elevator contracts, agree to re-ownership and sometimes lock-in carry when grain is stored.

Discussing use of hedging and options, Leffler emphasized, “Futures trading involves risk of loss and is not suitable for everyone.”

Essential to profitability is farmers knowing the cost of production. “Write post and execute your marketing plans,” Leffler advised. “Market in various methods and increments, yet be a disciplined marketer utilizing risk management tools.”

Insisting that farmers not dwell on past mistakes or decisions, Leffler said, “Still always have a plan for ‘what if’ we are wrong.”

Commodity prices are highly unpredictable and there are “no magic bullets,” he insisted.

“Marketing must be based upon a plan, and not emotions,” Leffler declared. “If you cannot do that, then hire a marketing advisor.”

Power point charts compared commodity prices now with a year ago, actually without much variation. Sharpest difference was April lean hog futures down $10.20 from last year’s $60.32. However, the March dollar index was up 6.38, at 96.48.

While soybean prices are frequent topic of discussion, values are down only slightly from last year.

                            Tom Leffler

Interestingly, Leffler pointed out when commodity prices set record highs. Grain price tops included Minnesota wheat, $24.26, February 2008; soybeans, $17.95, September 2012; and corn, $8.49, August 2012.

Feeder cattle topped at $245.70 in October 2014, while live cattle peaked in the same month at $172.75. Lean hogs top came in July 2014 at $133.87, and cotton high was $227 in March 2011.

High Dow Jones average was 26,952 in October 2018, and record S&P 500 was 2,945 in September 2018.

Gasoline topped at $3.62 in July 2008, and ethanol peak was $4.33 in June 2006.

Government estimates of commodity supplies have major impact on prices, the speaker admitted. With President Trump’s forced agency office closings, numbers reports have been delayed, he said.

Yet, predictions point to higher total cattle and beef cow inventories with the heifer count down. “Most noteworthy number is the prediction for beef cow replacements to decline from 4.6 to 7 percent,” Leffler said.

However, the calf crop is forecast up just under 2 percent. Lightweight calves and feeder steers are also predicted up from one to about 2 percent.

Per capita beef consumption has dropped in the past quarter of a century, the speaker said. People were eating an average of almost 80 pounds of beef annually in 1984, and now about 58 pounds. That’s up from 54 pounds in 2015, he noted.

Yet, charts revealed that live cattle have averaged upwards from about $60 in 1998 to a high of $171 in October 2014. Live cattle were $94.30, October 2016; $101.37, March 2018; and about $126 now.

Feeder cattle were 80 cents in 2002, peaking at $245 in October 2014, down to $118 in October 2016. Price increased to $161 in November 2017, dropped to $128 in April 2018, and is about $144 presently.

U.S. corn production last year was the third largest ever at 14.42 billion bushels. That’s due in part to the second largest average yield of 176.4 bushels per acre.

Additionally, corn stocks are the seventh largest in the past 26 years at 1.7 billion bushels. World corn stocks are the fourth largest on record.

“This all points to lower corn prices,” Leffler admitted. December corn was $3.83 last September, moved to $4.08 in October and now is $3.96. Notable, December corn was $1.86, November 2005.

U.S. soybean production was record large last year at 4.54 billion bushels. This again was in part to yields being the second highest average record at 51.6 bushels per acre.

Stocks are also record high at 910 million bushels. World soybean production and stocks were both record high at 2018 year end.

November soybeans were $5.01 in November 2014, went to $16.37 in July 2008, and peaked at $17.l89 in September 2012. Market dropped to $8.26 in July 2018, with November soybeans about $9.60 presently.

Wheat has become a less important cash crop for the nation’s farmers as apparent in production charts.

World wheat crop has continued upward reducing U.S. acreage with fall plantings the second lowest ever. Exports are consequently declining with near record stocks thus binding prices at about $5 now, compared to $8 in 2013. “The U.S. continues to lose market share of wheat exports,” Leffler verified.

“Marketing is important to your profits,” Leffler declared. “It’s crucial to obtain marketing advice and listen to those that say what you need to hear.”